Tightening Regulation in Live E-commerce Industry and Major Shuffle of MCN Institutions: In-depth Analysis and Investment Insights

I will provide you with an in-depth analysis report on the dynamics of MCN institutions and investment insights against the backdrop of tightening regulation in the live e-commerce industry.

Crazy Little Yang Ge (Three Sheep) encountered a series of negative events in 2024:

• Crab Lady Incident:
  Clashed with Xin Ba over hairy crab live streaming, was removed from the Suzhou Yangcheng Lake Hairy Crab Association; Xin Ba even publicly stated that he was willing to pay 100 million yuan on behalf of Little Yang Ge for compensation.
• Hong Kong Meicheng Mooncake Incident:
  Exposed for false advertising, which continued to escalate.
• Jowl Meat with Preserved Vegetables Incident:
  Involving food safety issues.
• Beef Roll Incident:
  Fined 500,000 yuan, involving 42,000 consumers.
• Fan Loss:
  Lost over 1.19 million fans in the past 30 days.

• Hefei Pink Baby E-commerce Co., Ltd. plans to deregister.
• Hefei Opple Three Sheep Technology Co., Ltd. plans to deregister.
• Terminated the lease at Hangzhou Bodhi Center Office Building and moved to Xihu District.
• The announced opening plan of the Shanghai branch has not been implemented for a long time.

The situation of Three Sheep is not an isolated case, but a microcosm of the difficulties faced by the MCN industry:

• Xinxuan Group (Xin Ba) moved back to Guangzhou from Hangzhou; Boss Zhipin shows that 50% of its positions are located in Guangzhou, while only 6% are in Hangzhou.
• Top anchors like Xiang Tai have also been reported to terminate their leases in Hangzhou one after another.
• Crazy Little Yang Ge terminated the lease at Hangzhou Bodhi Center.

• In 2024, the average income of mid-tier anchors dropped by about 60% compared to the peak in 2021.
• Nearly 30% of small and medium-sized anchors have monthly income below 10,000 yuan.
• About 20%-30% of small and medium-sized internet celebrities left Hangzhou.
• An anchor revealed: A live broadcast had a GMV of 2 million yuan, but only 500,000 yuan was effectively signed for; the commission received was 10,000 yuan, and the profit after deducting costs was only 3,000-4,000 yuan.

• On December 19, the State Administration for Market Regulation (SAMR) publicly notified five typical cases of false advertising in private domain live streaming, with penalties covering the entire chain of “platforms, service providers, operators, and offline stores”; the highest single penalty and confiscation amount reached 1.229 million yuan.
• CCTV’s “News Broadcast” and “Weekly Quality Report” and other programs simultaneously exposed industry chaos in depth, releasing an unprecedentedly strong regulatory signal.
• The “Regulations on Supervision and Administration of Live E-commerce Operators’ Implementation of Food Safety Main Responsibility” will be released and implemented soon, which will conduct full-link supervision before, during, and after live streaming.

• “Virtual popularity” service providers were severely punished (e.g., Weizan).
• The number of complaints and reports about live streaming e-commerce increased by 47.1 times in 5 years.
• Platforms need to establish working mechanisms such as "intelligent monitoring, investigation and scheduling, and rapid disposal.

1. Tax Compliance Risk:
   Most platforms adopt a unified collection and then split account model, and the cost of VAT compliance is extremely high. Once tax inspection is launched, the supplementary tax, late payment fees, and fines faced by historical sales will be a “catastrophe” for most platforms.
2. Business Model Risk:
   The “franchise expansion + multi-level incentive” model is very easy to touch the legal red line of pyramid schemes. A招商 director directly stated: "In terms of taxation and business model, only a few merchants are fully compliant at present.

• The proportion of brand store broadcast transactions on platforms like Tmall and Douyin has exceeded 50%.- From February 2024 to January 2025, among merchants who obtained income through live streaming, store broadcasts accounted for 69%.- Taobao Live core store broadcast transactions increased by 36% year-on-year.- A home textile enterprise cut its budget for internet celebrity cooperation by 50% and turned to invest in store broadcasts.

"In the past, looking for top anchors to bring goods, although GMV looked good, the pit fee was extremely high, 30% of the commission was taken away, and we had to face a return rate of more than 40%. What’s more fatal is that users only recognize the anchor but not the brand, and there is no precipitation for the merchant. After a live broadcast, the brand side has nothing left except losses.

• In 2024, the transaction scale of live e-commerce reached 5.33 trillion yuan, with a year-on-year growth of only 8.31%, and the growth rate declined significantly.- It is expected to reach 5.6 trillion yuan in 2025, entering a normalized development stage.- The incremental dividend of e-commerce has completely peaked: the year-on-year growth rate of online retail sales of physical goods dropped sharply from 14.8% in 2020 to 0.49% in 2024.

• None of the 32 leading MCN institutions in Hangzhou withdrew; their total revenue in the first half of the year was 5.993 billion yuan, and profits exceeded 300 million yuan, overall in a profitable state.- “Kuaishou First Sister” Dandan’s total transaction volume exceeded 5.5 billion yuan within 12 days after starting her own business.- Leading institutions such as Yaowang Technology and Jiaoge Pengyou are still expanding.

• The space for MCN institutions that rely on “reselling traffic” to survive is squeezed.- A large number of entertainment anchors left Hangzhou (non-cargo anchors).- 90% of small and medium-sized merchants may be eliminated.

• Pure traffic intermediary MCN institutions (without supply chain capabilities).- Mid-tier talent incubation institutions (the trend of 60% income decline continues).- Institutions relying on a single top anchor (e.g., Three Sheep model).- Private domain live streaming platforms (high tax and business model risks).- Institutions providing data fraud services (key targets of regulatory crackdown).

**Core Investment Logic: From “Traffic-Driven” to “Supply Chain-Driven”

1. Supply Chain Service Providers with Strong Capabilities:**

• Product selection, quality control, and inventory management capabilities become core competitiveness.- Institutions with industrial belt resources are more investment-worthy.- Case: Luozhuang District of Linyi established a “production and sales alliance”, and 213 Market cooperated with China Supply and Marketing Cooperative.

• AI real-time inspection system (meets compliance requirements).- Live room digital management system.- Data analysis and optimization tools.- Virtual anchor technology (need to pay attention to regulatory policies).

• Store broadcasts account for more than 50%, and demand is growing rapidly.- Service providers focusing on brand agency operations are more valuable.- Case: Leqi Group’s shelf e-commerce live streaming business segment grew by more than 100% year-on-year during the 2025 “Double 11”.

• Shift from targeting the silver-haired group to intensive cultivation of segmented circles (e.g., Baoma, health care groups).- Factory and origin direct live broadcast rooms (reduce intermediate costs).- High customer unit price service live broadcasts (tourism, health, etc.).

• Hangzhou released the “Action Plan for Intensifying Efforts to Promote High-Quality Development of Cross-border E-commerce”.- Support MCN institutions to cooperate with cross-border e-commerce sellers and platforms.- Temu’s African MAU increased by 424%, and cross-border increments are tilted towards emerging markets.

• Douyin: 40% market share; “search after watching” becomes a new traffic entrance (daily PV 110 million).- Taobao Live: 11 billion yuan investment anchors the “double doubling” goal (double doubling of transaction volume and user scale).- Kuaishou: Estimated live sales of mooncakes increased by 306.27% month-on-month during the Mid-Autumn Festival.

• High-quality service providers within the platform ecosystem.- MCN institutions deeply bound to the platform.- Platform technology solution providers.

1. Compliance: Tax compliance, business model compliance, product qualification.
2. Supply chain capability: Whether there are stable supply chain resources.
3. Profit model: Whether it is overly dependent on top anchors or a single platform.
4. Data authenticity: Core indicators such as GMV, conversion rate, return rate.
5. Team capability: Operation capability is greater than anchor capability.

1. Deep verticalization of user operations: Intensive cultivation of segmented circles.
2. Supply chain traces back to upstream: Factory and origin direct operation.
3. Integration of online and offline experiences: “Offline experience, online transaction”.
4. Compliance supervision technology: AI real-time inspection will become a standard.

The frequent deregistration of subsidiaries by MCN institutions such as Three Sheep is indeed a signal of accelerated industry shuffle, but it is not a sign of industry decline. Instead, it is an inevitable result of the industry entering the “mature stage of value deep cultivation” from the “unregulated growth stage of traffic carnival”.

• ✅ Embrace compliance: Only players who truly create value and abide by integrity can cross the cycle.
• ✅ Focus on supply chain: “Being an internet celebrity is not as good as doing store broadcasts; doing store broadcasts is not as good as doing supply chain”.
• ✅ Focus on leading players: Market share will concentrate on a few giants with both supply chain capabilities, technical strength, and compliance systems.
• ✅ Layout ecosystem: Shift from simply investing in MCN institutions to investing in the entire industry chain ecosystem.

"The essence of private domain live streaming is the trust economy of regular customers. Too much trust was overdrawn in the past; now it’s time to repair it. The key battle in 2026 lies in whether we can repair the reputation and rebuild the confidence of consumers and their families.

This shuffle is not the end, but the starting point of the value return of the trust economy.

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[1] China Consumers Association Report - Live E-commerce Complaint Data (2024)
[2] State Administration for Market Regulation - Notification of Five Typical Cases of False Advertising in Private Domain Live Streaming (December 19, 2024)
[3] “Regulations on Supervision and Administration of Live E-commerce Operators’ Implementation of Food Safety Main Responsibility” (to be released)
[4] CCTV “News Broadcast” and “Weekly Quality Report” in-depth reports on live e-commerce chaos (December 2024)
[5] "China Network Performance (Live Streaming and Short Video) Industry Development Report (2024-2025)
[6] Zhongshang Industry Research Institute - “2024 China Live E-commerce Market Data Report”
[7] Wangjing She - “2024 China Live E-commerce Market Data Report” released
[8] Hangzhou Municipal Bureau of Commerce - Live E-commerce Data (January-October 2025)
[9] Hangzhou Live Marketing Industry Association - Data of 32 Leading MCN Institutions in Hangzhou
[10] Luozhuang District of Linyi - “‘Jiebie Tongxinhui’ Helps Yimeng Specialty Products ‘Go Out’ via Private Domain Live Streaming” (Langya News Network)
[11] 213 Market Private Domain Live Streaming Cooperation Case (Sohu News)
[12] Shenzhen Network Live Streaming Association - Data of “2025 Shenzhen Live E-commerce Month”
[13] Sina Finance - “10,000 Anchors Bring Goods Worth 46.5 Billion Yuan, Live E-commerce Rises Rapidly” (December 4, 2025)
[14] Huxiu - “90% of Small and Medium-sized Merchants Eliminated? Private Domain Live Streaming Ushering in a Big Shuffle” (December 23, 2025)
[15] Touzijie - “90% of Small and Medium-sized Merchants Eliminated? New Blue Ocean Ushering in a Big Shuffle” (December 2025)
[16] NetEase News - “Live E-commerce Transaction Volume May Reach 5.6 Trillion Yuan, Anchor Average Income Drops by 60%, Some Leading MCNs Move Out of Hangzhou” (2025)
[17] Sina Finance - “Hangzhou Anchors Retreat, Live Streaming Rich Age Ends?” (December 18, 2025)
[18] Sina Finance - “From Traffic Carnival to Value Deep Cultivation: The Advanced Road of Hangzhou Live E-commerce” (December 25, 2025)
[19] Securities Times - “10,000 Anchors Bring Goods Worth 46.5 Billion Yuan, Live E-commerce Rises Rapidly” (December 4, 2025)
[20] E-commerce Big Data Database “Dianshubao” - 2024 Live E-commerce Data